Paper Money Collapse: The Folly of Elastic Money, 2nd Edition

Chapter 10Endgames—Inflationary Meltdown or Return to Hard Money?

Most of our task is now done. The conceptual foundations of today’s mainstream consensus have been exposed as fragile and defective. The now widespread belief in active monetary policy, in central banking, in lender-of-last-resort arrangements, and in a policy of ongoing monetary debasement has been revealed as unjustified and untenable. Our system of fully elastic money under state control is fundamentally incompatible with capitalism and a free society. It is a hindrance to extensive human cooperation across borders and a source of economic disruption and chaos. The real money of capitalism is international, apolitical, and inelastic.

I have no doubt that the present system must ultimately collapse under the weight of its own inconsistencies or get replaced with something else. What is inefficient and plainly unsustainable will not survive. In this final chapter, I try to take a look into the future. This part of the analysis must be the most speculative. Our future is not predetermined, or if it is, we have no way of knowing what it is. Various scenarios seem possible, and there may be some that we cannot even think of today. However, if we have analyzed the drawbacks of the present system correctly, it is clear that after more than 40 years of unconstrained global money production, the global economy is laden with extensive distortions and misallocations of capital, and that at this point no painless and therefore ...